Tag Archive: Inventory and Operations Planning

Forecasting: How Far Should You Look into the Future?

July 3rd, 2017
SIOP S&OP

Setting strategy or designing a sales, inventory and operations planning (SIOP) process requires forecasting. How far into the future do you look and why?

Whether setting strategy or designing a SIOP (sales, inventory and operations planning) process, one of the most important questions to consider in forecasting is how far into the future will you look? And why?

As we think about whether the answer should be 1 month, 1 quarter or 1 year, check your thinking. When assessing the future it is important to think through the elements that may impact your forecast.

10 Questions to Ask When Forecasting and Designing SIOP

1. Do you have customer contracts in your business/ industry? If so, how far out do they go?

2. Regardless of the commitment level, how far out do you have information that is somewhat reliable? If it changes substantially from month-to-month, is it of any value?

3. How reliable is your forecast by product or customer grouping? Forget about items and sku-level forecasts. How about product category forecasts?

4. Do you have access to demand data into your supply chain?

5. Are you asking questions about what is coming down the pike? If not, why not?

6. How much cushion do you have? Do you have inventory or capacity availability?

7. How prepared is your supply chain? Can they handle volume spikes?

8. Are you willing to dedicate people to gain a view into the future? Why or why not?

9. Have you considered a strategic sprint? Why are you setting arbitrary time frames when customers don’t care what you do? They want what they need when they need it.

10. Are there downsides to looking too far into the future? What are they?

 

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Forecasts Are Always Wrong So Why Bother?

4 Excel for SIOP Success

 



SIOP is Not a Supply Chain Project

June 10th, 2016
SIOP is organization-wide

The full benefits of SIOP blossom when its treated like an organization-wide strategic initiative instead of a narrower supply chain project.

Although the supply chain and operations resources typically coordinate the SIOP process as their skills align best with the majority of the processes, the reason for its success is that it is an organizational priority. The two areas of sales, inventory and operations planning focus include:

  • Aligning demand with supply
  • Aligning the functions related to or impacted by demand and supply on the same page

Thus, the reason it cannot be successful as a supply chain resource project should be apparent. The participants include the following:

  • Resources related to demand – sales, marketing, customer service, R&D, new product development, customers, etc.
  • Resources related to supply – manufacturing operations, outside processing production processes, planning, procurement, logistics, quality, suppliers, etc.
  • Resources impacted by demand and supply – those interested in profit, cash flow, inventory levels, customer service, etc., such as Finance, executives, Boards, etc.

Who else is there? I cannot think of any! Now, imagine the challenge in aligning them on the same page with one plan – the “secret sauce” to SIOP success. If you are interested in learning more about partnering with us to use our proven method (4 EXCEL) for driving results, contact us.

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Collaborate for Project Success

SIOP Success is a Straight Line to People

 



SIOP Success is a Straight Line to People

May 26th, 2016
SIOP success

The technical aspects of SIOP still have to filter through people. Success happens when everyone in an organization is operating from a single integrated plan.

As with everything in business success, SIOP (sales, inventory and operations planning) success is a straight line back to people. Thus, it is the reason I started my business with the “Profit through People” brand and continue with it as one of our service lines and for our newsletter. In the last 5 years, we have completed many SIOP projects and have found the keys to delivering rapid, bottom line results – exceptional customer service, significant growth, improved margins, accelerated cash flow and high morale. These keys to success are built into our proprietary process for SIOP, 4 EXCEL, which drives exponential results.

Even though SIOP is all about aligning demand with supply and has many technical components ranging from demand planning to master scheduling to inventory strategy and cash flow planning, we have gained the most significant results by aligning ALL areas of the organization on one page – the PEOPLE! There is no coincidence that the first of the 4 E’s of EXCEL is ENGAGE.

Some of the most challenging issues we’ve faced while implementing SIOP had nothing to do with the technical components. For example:
• How do we get sales and production on the same page?
• Can R&D and production work to one integrated plan?
• How can we align our customers and suppliers on the same page?
• How can we get finance, sales and operations on the same page?
• And so on…

We find that becoming expert in culture change and collaboration is important to success. Clearly, communication is at the crux of this equation as well. If you are thinking about how to get each of these parties to see how SIOP will benefit them to align on one page, give us a call to learn more about 4 EXCEL.

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4 Excel for SIOP Success

Why Are Communications So Difficult?

 



SIOP beyond Borders

May 6th, 2016
SIOP beyond borders

In today’s interconnected business environment amplify SIOP’s reach and potential to include all supply chain partners, even globally.

SIOP (Sales, Inventory & Operations Planning) is one method to align demand with supply while also aligning the various functions within an organization to deliver strategic objectives and maximize business value. As popular as it is becoming, I think we must challenge ourselves further with SIOP beyond borders.

Although it certainly can mean the interconnectivity in today’s end-to-end supply chain, it also can simply mean the connectivity and alignment among supply chain partners. For example, as we connect our customers with our suppliers, our IT partners with our customers’ requirements and the like, we gain a distinctive advantage in the supply chain. It is simply amazing that we can gain exponential results by connecting functions within a company and organizations in the supply chain.

Why stop there? Many of our supply chain partners could be international partners and cross borders. How can we develop an integrated planning process that not only incorporates what is rarely done in any organization but also consider global impacts? Start by expanding your mind and thinking.  Global impacts affect us every day, ranging from natural disasters to port strikes to political unrest to rules and regulations. One of the best ways to bring out the strengths of a global supply chain and leverage the collective strengths for the common good is to think about SIOP beyond borders. If you are interested in learning more about this topic and implementing it at your company, contact us to learn more about our proprietary SIOP process, 4 EXCEL, proven to gain exponential results.

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SIOP/Integrated Business Planning

Have You Performed a Supply Chain Checkup Lately?

 



Types of Capacity

June 11th, 2015
types of capacity

Businesses with growth ambitions have to gauge the current capacity of every facet of their facility to plan future productivity.

Capacity is a critical element for any business – and especially those interested in growth! A good place to start is to understand your capacity, which can mean different things to different people. The traditional definition relates to the total output you can expect from a machine, group of machines or facility. I view capacity as all of the following:

1. Machine – if your machines were running 24/7, what is the output you would expect?

2. Machine staffing – given your staffing levels, what is the output of your machines?

3. People – what resources and skills do you have available?

4. Building – what is your available space for manufacturing, warehousing, etc.?

5. Warehouse – what is your available storage capacity for your products?

6. Tools/fixtures – what is the available capacity of your tools and fixtures?

7. Shipping & receiving – what is your available capacity in terms of shipping and receiving?

8. Transportation – what is the available capacity of your trucks/transportation partners?

9. Supplier – what is your supplier’s available capacity?

The most important first step is to understand your current capacity. The vast majority of companies I consult with do not have a comprehensive view of this. Thus, this step alone can go a long way. Once you know your current capability, you can compare with required capacity and take actions to address.

Capacity is one of the key steps in a SIOP process (sales, inventory & operations planning). I’ve helped my clients achieve dramatic improvements in service levels, reductions in inventory levels (which frees up cash flow) and improved margins stemming from getting a better handle on capacity. 

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